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British Land has identified the potential to convert almost 2.5M SF of its retail portfolio and the land around it into other uses, including up to 1.5M SF of logistics, it announced this week.
As part of a review into alternative and additional uses for its retail assets, the UK’s third-largest REIT said it could take about 500K SF of its existing portfolio and 500K SF of surrounding land and create 2.4M SF of additional space in more profitable sectors.
It said 1.5M SF of that would be logistics — given the convergence of rents in the two sectors, British Land is looking into the possibility of converting space on its retail parks into last-mile warehousing. Another 600K SF would be offices and 300K SF residential.
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On a conference call with analysts, Carter stressed that BL is in the early stage of looking into such projects. He added that some repurposing schemes would be undertaken in partnerships, and in some cases the firm would just sell sites or land to new owners.
He also gave some specific examples of where such repurposing schemes could be undertaken.
“Alternative and additional uses is another avenue we are pursuing to create value in retail,” he said. “It will not work in all locations. But a good example is Meadowhall [shopping centre in Sheffield], where there is around 440K SF of surrounding land that we think can be repurposed as logistics. And we have a similar opportunity at Teeside [in Stockton].
“We wouldn’t expect to do all of these projects ourselves. Some will be done in partnership, others will be sold, but the progress we are making helps underpin value.”
Carter was speaking as British Land unveiled results for the six months to 30 September. The company’s earnings per share dropped 35% compared to the same period in 2019, driven by a 10% fall in retail rents. Office rents actually increased by 4% in the period.
The company’s net asset value dropped by 10%, driven by a 7% fall in the value of its portfolio to £10.3B. Its retail assets dropped by 15%, while its offices dropped by 3%.
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